The Value of Twitter

Ben Brooks, in his article discussing the challenges that Twitter is facing at becoming profitable, writes:

We must assume that Twitter wants the service to remain free to users at all costs. […] Making those assumptions means that Twitter has decided a large, vast, user base is better than a small profitable user base.

My short response is that yes, Twitter has absolutely decided that a large and vast user base is better than small and profitable one.

My lengthier response is that it’s hard to imagine Twitter ever expected to grow as fast as it has or become large as it is now. And now, in a way, I think that because of its growth, Twitter as a service has proven on its own behalf that having a large and vast user base is more important to Twitter the company than having a small but profitable one.

The strength of Twitter is in its simplicity (anyone with an SMS-enabled phone can post an update) and its enormous user base. And I bet that the founders of Twitter see its strength not just in what it currently is (an enormous and active social network) but in what it has the potential to be (an even bigger network with a scope far beyond just social interaction).

Twitter is used by real people to share moments, ideas, and news with their family, friends, and the rest of the world. The more people who use Twitter the more valuable it becomes. And the company gets this, because in an interview with NPR last month, Biz Stone gave us a glimpse of where they’ve set their sights:

We are now living in an age where there are 5 billion mobile phones. They all have SMS, they all are capable of accessing the Twitter network […]

A network with 5 billion accounts? That would be unprecedented. I can’t even imagine it. Twitter would be more famous than Michael Jordan. Before they even grow to just 10 percent of that they are going to need a working business model — a way to support the staff and infrastructure necessary to keep Twitter going.

So far Twitter as company is struggling in their attempts to become profitable. A suggestion Ben Brooks gives in his aforementioned article is that Twitter could simply transition to a paid-only model:

Imagine that Twitter’s estimated 200 million user base was asked to pay $6 a year to use the service (something that would amount to $0.50 a month). I would guess Twitter would lose some users — let’s be brutal and assume they lose 70% of users instantly. That leaves the service with about 60 million users — a large drop.

That is 60 million paying users though, and at $0.50 each monthly that amounts to $30 million dollars in revenue each month.

$30 million in revenue each month would be great for the company. But I don’t think that’s how the company wants to make its money. Because turning Twitter into a paid-only service would be a huge disservice to many of its users, as well as its non-users.

It is quite safe to assume most Twitterers would never pay for the service. If it became a paid-only network they would simply sign-off and be done with it. I would be willing to stay and pay but only if many of the people I follow stayed and paid also.

The greatest value Twitter has is that so many people use it. I would not want to pay six bucks a year and be stuck with nobody to follow but a bunch of insipid corporations.1

However, Twitter is not trying to answer the question of who would or would not stay and pay. They are trying to find a business model that will support those who cannot pay so even more of them will sign up.

Because, in a way, going to a paid-only service would be similar to when Egypt blocked access to Twitter and Facebook for its citizens earlier this year. It may not be quite that intense, but I bet that’s how Twitter the company would see it. They do not want to keep one single person from being able to use their service. They see it as being too valuable to the world for something like that.

7 hours and 118 aftershocks later, the store was still open. Why? Because with the phone and train lines down, taxis stopped, and millions of people stuck in the Tokyo shopping district scared, with no access to television, hundreds of people were swarming into Apple stores to watch the news on USTREAM and contact their families via Twitter, Facebook, and email.

Twitter as a service played a critical role in informing the world about the earthquake in Japan, as well as helping friends and families keep their loved ones informed of their status. The earthquake in Japan was not the first time Twitter has served such a role. And that is something Twitter as a company is very proud of.

Here is Biz again, from the same NPR interview:

“How a revolution comes to be is a mystery to me,” he says. “It’s important to credit the brave people that take chances to stand up to regimes. They’re the star. What I like to think of services like Twitter and other services is that it’s kind of a supporting role. We’re there to facilitate and to foster and to accelerate those folks’ missions.”

It would be regrettable if those who cannot pay were locked out from using one of the most powerful tools for global communication and information sharing there has ever been. The NPR writer adds that “Twitter purposefully allows everyone access because information — both good and bad — should be allowed to flow freely.”

There is no way the founders of Twitter could have expected their service to become as important to the world as it has. Though they need to make money to survive, they now they have a goal which, in their minds, just might be more slightly more important than turning a profit. And that goal is to build the value and nobility of Twitter as service by remaining free to users at all costs.

A more popular suggestion has been that Twitter offer a “Pro” account and let users pay a small monthly fee to get some cool bonus features. Ben actually concludes with this suggestion, and many others have made it as well. But I am not writing this article to discuss the minutia of potential business models for Twitter. It’s an article observing what Twitter as a company sees as their most important goals, and how, in some ways, nobility and ubiquity have become of higher value than profitability. ↵

Published on March 28, 2011

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